Brake dragging/grinding noise
 

Is it the lip on worn down rotors that causes this grinding noise?
http://www.youtube.com/watch?v=VQBD127anik

The lip on either side of the brake pad is about 1mm.

It's really loud at speed in my car, the handbrake is adjusted as per the workshop manual. Only other thing I can think of worth mentioning is I'm missing the anti-rattle springs.

Any ideas?